Take-up

30 October 2015, by Kevin Mofid

Take-up for the first three quarters of the year has reached 17.5m sq ft across the country.

 

■  Take-up for the first three quarters of the year has reached 17.5m sq ft across the country over 73 separate transactions. This is almost 1m sq ft above the long term average for take-up levels achieved by the end of the third quarter.

■  Whilst these levels are robust we have seen take-up levels decline for the second successive quarter. However, this can be directly attributed to lack of market supply in core markets and key size bands as we examine further in the paper.

FIGURE 1

Year to date take-up above average

 
Figure 1

Source: Savills Research

■  The largest deal of quarter was Howdens agreeing to take 655,000 sq ft in Warth Park, Raunds. This pre-let unit will be leased to Howdens for 30 years without a break and is expected to complete in June 2016.

■  Previous research by Savills has estimated that up to 50m sq ft of logistics property will be required to meet the demands of the online retail sector. This came through in force this quarter with Amazon accounting for 26% of all take-up. We estimate that should a number of deals complete in the fourth quarter Amazon will make up almost 10% of all of the floor space transacted in 2015 in the UK.

■  At a regional level the East Midlands accounted for 30% of all take-up in the third quarter, equating to 1.06m sq ft, driven by the aforementioned deal to Howdens. However by deal count once again the North West took pole position with four separate deals equating to 23% of the market.

FIGURE 1

East Midlands dominating

 
Figure 2

Source: Savills Research

■  Over the long term average the retail sector has accounted for 50% of the market. However, 2015 has seen the logistics and 3PL sector increase its share of the market to 29%, manufacturing to 28% and retail fall to just 43%. This has been driven by a number of large 3PL deals such as Exertis taking 544,000 sq ft in Burnley and Great Bear taking a 480,000 sq ft pre-let at Markham Vale in Derbyshire.

■  In previous years a key driver of take-up in the market has been the churn of deals in the sub 200,000 sq ft size band, accounting for 42% of take-up in 2013 and 43% of the market in 2014. However in 2015, this part of the market has fallen to just 25% of the space transacted. In the most part this is driven by falling supply in this sector and we expect this part of the market will rebound in early 2016 when a number of speculative units enter our supply figures.

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Key Contacts

Kevin Mofid

Kevin Mofid

Director
Commercial Research

Savills Margaret Street

 

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